Stocks that have enjoyed positive reactions to earnings and/or same-store sales numbers include Lululemon and Limited Brands. Preferred homebuilder names include KB Home and PulteGroup.

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Here are a couple of noteworthy sectors.

Sector: Leisure/Retail
Bullish

Outlook: Same-store sales for September rose 1.3% from the previous year, according to Briefing.com, and were helped by seasonal weather and the debut of fall merchandise. For the fifth month in a row, discretionary sales trumped staples, 2.6% versus 0.9%. This is an encouraging sign that consumers remain willing to spend.

On the charts, the SPDR S&P Retail ETF (NYSEARCA:XRT) recently tested support at its 50-day moving average, which is parked in the $62 area, site of the security's March/May highs. The next technical hurdle for the XRT -- beyond its annual high at $65.47 -- could come around $67.50. This is roughly 50% above the key $45 mark, which acted as a ceiling in June 2007 and April 2010, before providing support in August/October 2011.

On the options front, we are seeing huge put open interest in the front-month series for XRT, which suggests long players in the sector are hedged via the ETF, and could mean limited downside on pullbacks. As far as specific equities go, we prefer stocks that have enjoyed positive reactions to earnings and/or same-store sales numbers, such as LululemonAthletica (NASDAQ:LULU), Limited Brands (NYSE:LTD), and Gap Inc. (NYSE:GPS).

Contrarian investors should continue to look for trade setups where outperforming retail stocks remain unnoticed by the crowd. Given recent indications of overexposure on the part of hedge funds, however, we would recommend avoiding any "popular" stocks in this group that have suffered poor price action. One example of this phenomenon is Sears (NASDAQ:SHLD), which is among the top-50 holdings at these prominent hedge funds, despite dropping roughly 30% from its March peak.